Nutrition businesses find new growth opportunities

Dar es Salaam. The first of its kind, Nutrition Africa Invest Forum (NAIF) highlighted the role of small and medium-sized enterprises (SMEs) in improving nutrition across the continent.

Six Tanzanian companies made their presence in the two-day event in Nairobi last week.

While micro businesses have funders but not scale, and large companies find attracting investment easy, it is the missing middle – small and medium growing businesses – that find it difficult to attract investment.

The forum met this challenge by hosting a platform for over 60 companies from across Africa to connect with investors from within the continent and abroad.

Among these, six Tanzanian companies made their presence felt. Five of them were startups and SMEs which pitched for investment at a Pitch Competition, where they showcased their work in tackling nutrition challenges following national competitions while one of them was an established company with a proven track record that came to connect with the investors in what they called as Nutrition Dealroom.

Mr Kevin Msola, who was representing Kibaigwa Flour Supplies in Dodoma, an SME dealing with milling and fortification of maize flour and works with 7,000-plus small holder farmers, was present.

He was pitching for $2 million to strengthen, expand and diversify milling, storage and working capital in Kibaigwa.

“The forum gave us a chance to come face to face with the investors and discuss financial issues. I met about nine investors and three of them showed high interest with us. I’m in conversation with them with regards to their visitation, disclosure agreements and so forth. These are the African Development Bank, Fanisi Capital and AgDevCo. We are still in the initial discussions with them,” he tells BusinessWeek.

“Kibaigwa Flour Supplies is not new in the business; we are about 10 years old. Moreover, what attracts them is the huge market we have and the place we are located at. Being in the maize and sorghum value chain, we are assured of raw materials and market for flour in that area,” he says.

Twenty investors from across Africa and the rest of the world participated in the forum were ready to secure commitments worth $82 million of investment with different nutrition-sensitive SMEs across Africa, who often face challenges accessing affordable finance. Each investor varied. While some were willing to invest $200,000, others went up to giving the opportunity of $5million worth of investment.

Highlighting the importance of unlocking investments across the nutrition value chain, Fokko Wientjes, vice president for nutrition in Emerging Markets, said: “With 30-40 per cent stunted children in Africa there is an urgent need to make nutritious foods widely available, affordable but most importantly aspirational in the eyes of the consumer.”

International Potato Centre (CIP) was one among the investors present who were interested in Ms Fortunatha Mmari’s work. Her company, AFCO Investments, deals with processing and packing of cereals and bio-fortified crops. CIP is a root and tuber research-for-development institution delivering sustainable solutions to the pressing world problems of hunger, poverty, and the degradation of natural resources.

“They [CIP] have been in Tanzania for a long period of time – now they want to deal with SMEs in the country on how to commercialise the orange-fleshed sweet potatoes. So there is this opportunity we got to work with them in that project,” says Ms Mmari.

About deals, Ms Mmari says: “We didn’t strike a capital deal per se but at least we got the opportunity to sell our business idea to a lot of investors and for us as a small enterprise, we found that there is a lot of opportunities with those who are just initiating projects in Tanzania, such as those looking at women entrepreneurs in the nutrition business, and they didn’t know whom to include in their project – but at least they now know that we exist. We have been exposed to the right people.”

Ms Doreen Maximambali, one of the owners of Mkuza Chicks, a broiler business that targets low-income earners to access chicken meat packed in small packets worth Sh1200 to Sh2500, met with about nine investors, from which seven of them showed keen interest.

“We couldn’t take the talks further with all the investors that were interested because their budget was too high in terms of investing – from $5 million and above – compared to the sum that I was asking for,” she says. She wasn’t ready just yet to reveal how much she has pitched for.

“We are in conversation with one of the Kenyan investors, they have invested in the poultry business in Tanzania before, so they are quite aware of the business climate here and of the sector. It’s a series of steps and can take three to six months before we officially close the deal.”

NAIF turned out to be fruitful to Ms Maximambali’s business. She says: “We got to network and meet investors in these two days, which is very difficult to find otherwise. We understood what they were looking for, exchanged ideas with them and with participants from across Africa. We feel even more ready for other investment opportunities.”

Healthy Maisha, a startup that takes fruits and vegetables and cold-compresses them into juices without adding any water, additives or sugar targeting anaemic children, overweight women and anaemic women who are about 1.9 million in the country was one among the winners at the pitch competition earning the prize for innovation.

Neema Lugangira, founder of Healthy Maisha says that about 14 investors approached her business idea. She says: “The investors offered and expressed willingness to work with us in a number of areas. And the investors committed that after the forum we should have a follow-up discussion, and at the moment, that is what I am doing.”

She initially pitched for $57,000 but during her final pitch class, she was able to realise that for an investor to be attracted, to see the value of money for investors, the company needed to not only challenge itself but also to think bigger. So the final sum that she asked for was $166,000. “The feedback from the investors who were interested in Healthy Maisha was that ‘you have an innovative idea, you should think much bigger’ and that was encouraging to hear that our idea is worth it,” Neema adds.

In his opening statement at NAIF, former President Jakaya Kikwete said: “African nations lose 11 per cent of GDP each year due to malnutrition. Countries, therefore, should continue to develop sound policies, invest and take measures and actions to address nutrition challenges. Malnutrition is a key constraining factor of growth and development which deserve priority attention and action. Investing in nutrition development offers nations some of the highest development returns. For example, investing in addressing key micro-nutrient deficiencies in low-income food markets would unlock a market valued at $155-265 billion globally. Africa has a lot to offer now and in future. There are 1.2 billion Africans today and there will be 2 billion people in the African consumer market by 2050. The future prospects look bright.”

The Global Alliance for Improved Nutrition together with Royal DSM, SUN Business Network and African Business magazine hosted NAIF.